Correlation Between Byline Bancorp and Park National

Can any of the company-specific risk be diversified away by investing in both Byline Bancorp and Park National at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Byline Bancorp and Park National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Byline Bancorp and Park National, you can compare the effects of market volatilities on Byline Bancorp and Park National and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Byline Bancorp with a short position of Park National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Byline Bancorp and Park National.

Diversification Opportunities for Byline Bancorp and Park National

0.9

Correlation Coefficient

Byline Bancorp  Park National

Almost no diversification

The 3 months correlation between Byline and Park is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Byline Bancorp and Park National in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Park National and Byline Bancorp is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Byline Bancorp are associated (or correlated) with Park National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Park National has no effect on the direction of Byline Bancorp i.e., Byline Bancorp and Park National go up and down completely randomly.

Pair Corralation between Byline Bancorp and Park National

Allowing for the 90-day total investment horizon Byline Bancorp is expected to generate 1.97 times less return on investment than Park National. But when comparing it to its historical volatility, Byline Bancorp is 1.09 times less risky than Park National. It trades about 0.02 of its potential returns per unit of risk. Park National is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  11,960  in Park National on October 24, 2024 and sell it today you would earn a total of  4,754  from holding Park National or generate 39.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Byline Bancorp  vs.  Park National

Byline Bancorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Byline Bancorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Byline Bancorp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Park National

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Park National has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Park National is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Byline Bancorp and Park National

The main advantage of trading using opposite Byline Bancorp and Park National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Byline Bancorp position performs unexpectedly, Park National can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Park National will offset losses from the drop in Park National's long position.

The idea behind Byline Bancorp and Park National pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.